Financial Data and Key Metrics Changes - Keysight reported a revenue increase of 11% year over year to $1.4 billion and earnings per share of $1.72, exceeding guidance [6][21] - Orders increased by 7%, with growth across both the Communication Solutions Group (CSG) and Electronic Industrial Solutions Group (EISG) segments [6][21] - Gross margin was reported at 64%, with operating expenses of $526 million and an operating margin of 25%, reflecting a 60 basis point increase year over year [21] Business Segment Data and Key Metrics Changes - The Communication Solutions Group generated revenue of $940 million, up 11% year over year, with commercial communications revenue of $644 million, also up 13% [23] - The Electronic Industrial Solutions Group reported revenue of $412 million, an increase of 11% year over year, with growth across automotive, energy, semiconductor, and general electronics [23] - Software and services accounted for approximately 36% of total revenue, with annual recurring revenue at 28% [24] Market Data and Key Metrics Changes - The aerospace, defense, and government sectors showed robust demand due to elevated defense spending globally, particularly in the U.S. and Europe [11][12] - The wireless business remained stable, with momentum in non-terrestrial networks and continued R&D activity in 5G Advanced contributing to steady demand [10] - The semiconductor business experienced double-digit growth, driven by demand for wafer test solutions and advanced node technologies [17][92] Company Strategy and Development Direction - Keysight is capitalizing on opportunities in the AI ecosystem, focusing on advanced physical layer solutions and silicon photonics capabilities to enhance R&D workflows [8][9] - The company is engaged in early 6G research and shaping standards for its implementation, collaborating with industry leaders to drive innovation [11][86] - Keysight's strategy includes mitigating tariff impacts through supply chain optimization and pricing actions, while maintaining operational flexibility to invest and adapt [22][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the demand environment, noting that orders have accelerated and are slightly better than initial expectations [30][31] - The company anticipates continued growth in the aerospace and defense sectors, supported by robust backlogs and government budgets [55] - Despite challenges in the automotive sector, management remains optimistic about long-term growth driven by AI and other technological advancements [32][44] Other Important Information - Keysight generated cash flow from operations of $322 million and free cash flow of $291 million in Q3, with year-to-date free cash flow at $1.1 billion [25] - The company repurchased approximately 300,000 shares at an average price of $164, totaling $50 million [25] - The pending acquisition of Spirent is expected to close in the fiscal fourth quarter, with regulatory reviews progressing [25][80] Q&A Session Summary Question: Can you help investors understand your view of the end markets now? - Management noted strong order growth and positive customer activity despite geopolitical challenges, with AI and aerospace defense showing momentum [30][31] Question: What is supporting the revenue outlook into Q4? - Management indicated that timing of large deals impacted Q3 performance, but they expect more normal sequential seasonality in Q4 [34][35] Question: How should we think about the long-term growth rate? - Management suggested that while they initially expected low-end growth, recent performance has been better than expected, indicating bullish sentiment for fiscal 2026 [39][40] Question: What is the impact of tariffs on your business? - Management confirmed that tariffs are being mitigated through various strategies, and they expect to fully address the tariff impacts in the coming quarters [52][53] Question: Can you provide insights on the aerospace and defense market? - Management expressed confidence in ongoing programs and robust backlogs, with expectations for continued growth driven by government budgets [54][55] Question: What is the outlook for the semiconductor business? - Management highlighted strong demand for wafer test solutions and advanced technologies, indicating favorable growth prospects [92] Question: How is the mix between R&D and production testing evolving? - Management noted a shift towards more manufacturing exposure while still maintaining a strong R&D focus, benefiting from supply chain improvements [93][96]

Financial Data and Key Metrics Changes - Keysight reported a revenue increase of 11% year over year to $1.4 billion and earnings per share of $1.72, exceeding guidance [5][20] - Orders increased by 7%, with growth across both the Communication Solutions Group (CSG) and Electronic Industrial Solutions Group (EISG) segments [5][20] - Gross margin was reported at 64%, with operating margin at 25%, reflecting a 60 basis point increase year over year [20] Business Segment Data and Key Metrics Changes - CSG generated revenue of $940 million, up 11% year over year, with commercial communications revenue of $644 million, also up 13% [22] - EISG revenue reached $412 million, an 11% increase year over year, with growth across automotive, energy, semiconductor, and general electronics [22] - CSG delivered a gross margin of 67% and an operating margin of 26%, while EISG had a gross margin of 57% and an operating margin of 22% [22] Market Data and Key Metrics Changes - The aerospace, defense, and government sectors saw robust demand due to elevated defense spending globally, particularly in the U.S. and Europe [11][12] - The wireless business remained stable, with momentum in non-terrestrial networks and continued R&D activity in 5G Advanced [10] - Demand in the automotive sector improved sequentially, with stable year-over-year performance [15] Company Strategy and Development Direction - Keysight is capitalizing on the ongoing AI momentum and investing in advanced physical layer solutions and silicon photonics capabilities [6][7] - The company is focused on leading the industry into the next generation of innovation, particularly in 6G research and development [10][11] - Keysight's strategy includes enhancing collaboration with customers and leveraging a solid pipeline of opportunities [6][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the evolving trade and tariff environment while maintaining healthy margins and strong free cash flow [19] - The demand environment remains resilient despite macroeconomic uncertainties, leading to an upward revision of the full-year growth outlook [25] - Management noted that while some end markets are recovering, challenges remain in sectors like automotive [29] Other Important Information - Keysight's cash flow from operations was $322 million, with free cash flow of $291 million for the quarter [23] - The company repurchased approximately 300,000 shares at an average price of $164, totaling $50 million [23] - The pending acquisition of Spirent is expected to close in the fiscal fourth quarter, with regulatory reviews progressing [23][24] Q&A Session Summary Question: Can you help investors understand your view of the end markets now? - Management noted strong order growth and positive customer activity despite geopolitical challenges, indicating a better-than-expected performance [28][29] Question: What is supporting the revenue outlook into Q4? - Management highlighted the timing of large deals and expected more normal sequential seasonality in orders compared to revenue [31][32] Question: How should we think about the long-term growth rate? - Management indicated a bullish outlook for fiscal 2026, with a focus on executing Q4 and navigating tariff impacts [38] Question: What is the contribution of AI to Keysight's story? - Management emphasized that AI is driving demand across multiple end markets, particularly in wireline, with expectations for continued growth [40][41] Question: Can you outline the tariff impacts? - Management clarified that tariffs are expected to increase exposure by approximately $75 million annually, with mitigation strategies in place [48][51] Question: What is the outlook for the aerospace and defense market? - Management expressed confidence in ongoing demand due to robust backlogs and government budgets, with a steady growth trajectory expected [52][54] Question: How is the semiconductor business performing? - Management noted strong growth in the semiconductor business, driven by advanced nodes and increased customer interest in silicon photonics [90][91] Question: What is the impact of tariffs on orders? - Management stated that there has been no material pull-in of orders due to tariff changes, and demand profiles remain stable [104][105]

Financial Data and Key Metrics Changes - Keysight reported revenue of $1.3 billion and earnings per share of $1.7, exceeding the high end of guidance, marking the second consecutive quarter of revenue growth [6][19] - Orders grew 8% year over year and 4% sequentially to $1.3 billion, indicating a solid demand environment [6][19] - Gross margin was reported at 65%, with operating margin at 25%, an increase of 100 basis points year over year [19] Business Segment Data and Key Metrics Changes - The Communications Solutions Group (CSG) generated revenue of $913 million, up 9% on both reported and core basis, driven by strong demand in wireline and wireless sectors [21] - The Electronics Industrial Solutions Group (EISG) reported revenue of $393 million, a 5% increase, with growth in semiconductor and general electronics offsetting declines in automotive [21] - Software and services accounted for approximately 36% of total revenue, with annual recurring revenue at 28% [22] Market Data and Key Metrics Changes - Orders in the aerospace, defense, and government sector grew, driven by strength in the U.S. and Europe, with notable contracts awarded [12][61] - The demand environment in China was mixed, with overall orders flat but strengths in certain sectors [96] Company Strategy and Development Direction - The company is focused on long-term investments aligned with technology trends, particularly in AI and digital infrastructure [17][32] - Keysight is maintaining a diversified global supply chain with minimal exposure to China, actively working to mitigate tariff impacts [8][24] - The company is pursuing a balanced return of capital while investing for long-term growth, having returned over $1.7 billion to investors via repurchases over the past twelve quarters [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the market leadership and operating model, noting no material adverse effects on demand from tariffs [8][25] - The company raised its full-year growth expectations, now anticipating revenue growth at the midpoint of the 5% to 7% long-term target [25] - Management highlighted a healthy pipeline of opportunities and strong customer engagements entering the second half of the fiscal year [6][25] Other Important Information - The company ended the quarter with $3.12 billion in cash and cash equivalents, generating $484 million in cash flow from operations [22] - Keysight is progressing through regulatory reviews for pending acquisitions, including Spirent and Optical Solutions Group [22][23] Q&A Session Summary Question: Update on AI traction and its significance for the business - Management views AI as a long-term secular trend with a multiyear roadmap, contributing to growth in wireline business [32][33] Question: Incremental view on top-line outlook - The company raised top-line expectations based on strong performance in the first half and a solid pipeline of opportunities [40][42] Question: Clarification on tariff impact - The estimated annual exposure to tariffs is approximately $75 million to $100 million, with efforts underway to mitigate this impact [47][48] Question: Insights on aerospace and defense orders - Orders grew in the aerospace and defense sector, with strong bookings from prime contractors in the U.S. and Europe [61][62] Question: Wireless business performance - The wireless business remains stable, with strength in network infrastructure and ongoing investments in new technologies [71] Question: Growth in Software and Services - The company is focused on growing software and services, which have shown resilience during downturns [73][74] Question: Demand for wireline testing - The wireline business is heavily R&D oriented, benefiting from increased manufacturing activity as the industry ramps up for digital infrastructure [103][104] Question: Competitive landscape for semiconductor testing - The company is well-positioned to address the complexities of semiconductor testing, with ongoing investments in optical and electrical capabilities [108][116]

Financial Data and Key Metrics Changes - Keysight reported revenue of $1.3 billion and earnings per share of $1.7, exceeding the high end of guidance, marking the second consecutive quarter of revenue growth [5][18] - Orders grew 8% year over year and 4% sequentially to $1.3 billion, indicating a solid demand environment [5][18] - Gross margin was reported at 65%, with operating margin increasing by 100 basis points to 25% year over year [18] Business Segment Data and Key Metrics Changes - The Communications Solutions Group (CSG) generated revenue of $913 million, up 9% on both reported and core basis, driven by strong demand in wireline and wireless sectors [21] - Aerospace, Defense and Government revenue increased by 9% to $300 million, reflecting strong order growth in the U.S. and Europe [21] - The Electronics Industrial Solutions Group (EISG) saw revenue return to growth at $393 million, a 5% increase, with semiconductor and general electronics growth offsetting declines in automotive [21] Market Data and Key Metrics Changes - Orders in the aerospace and defense sector grew, driven by investments in defense modernization in the U.S., Europe, and Asia [11][12] - The demand environment in Asia was strong, particularly in commercial communications and semiconductor sectors, although automotive demand in China remained weak [92] Company Strategy and Development Direction - Keysight is focused on long-term investments aligned with technology trends, emphasizing a diversified global supply chain with minimal exposure to China [6][24] - The company is pursuing a balanced return of capital while investing for long-term growth, having returned over $1.7 billion to investors through share repurchases [6][7] - Keysight's strategy includes expanding its software and services segment, which now accounts for approximately 36% of revenue, with a focus on simulation and virtual prototyping [70] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in market leadership and the strength of the operating model despite macroeconomic uncertainties [6][25] - The company raised its full-year revenue growth expectations to the midpoint of its 5% to 7% long-term target, anticipating a strong Q3 based on a solid backlog [25] - Management noted that while tariffs pose risks, they have not seen material adverse effects on demand and are actively working to mitigate tariff impacts [24][25] Other Important Information - Keysight's cash flow from operations was strong at $484 million, with free cash flow of $457 million [22] - The company has a backlog of $2.4 billion entering Q3, indicating a solid scheduled shipment position [25] - Keysight is progressing through regulatory reviews for pending acquisitions, including Spirent and Optical Solutions Group [22] Q&A Session Summary Question: Update on AI traction and its significance for the business - Management views AI as a long-term trend with a multiyear roadmap, contributing to growth in wireline business, which grew double digits in the first half [30][33] Question: Incremental improvement in top-line outlook - The increase in top-line expectations is based on strong performance in the first half and a solid pipeline of opportunities [39] Question: Clarification on tariff impact - The estimated annual tariff exposure is $75 million to $100 million, with efforts underway to mitigate this impact [44][45] Question: Insights on aerospace and defense orders - Orders grew in the U.S. and Europe, with notable contracts awarded, indicating a strong spending environment [56] Question: Understanding the wireless business performance - The wireless business remains stable, with strength in network infrastructure and ongoing investments in new technologies [66] Question: Growth in Software and Services segment - The company is focused on growing software and services, which have shown resilience during downturns, with double-digit growth in simulation business [70] Question: Demand in wireline and semiconductor testing - The wireline business remains heavily R&D oriented, benefiting from increased manufacturing activity as the industry ramps up for digital infrastructure [96]